Conservative leaders will outline their anti-poverty plans this weekend in one of the country’s poorest states.

January 8, 2016

This Saturday, conservative leaders will gather in South Carolina for the “Kemp Forum on Expanding Opportunity” co-hosted by Speaker Paul Ryan and Senator Tim Scott. With an overall poverty rate of 18 percent in 2014, South Carolina ranks among the 10 poorest states in the country and has one of the lowest rates of health-insurance coverage. And for low-income South Carolinians, these statistics are merely a reminder of the harsh realities they face.

Billed as an opportunity for conservatives to outline their major plans on tackling poverty, the forum comes after months of heightened rhetoric on poverty and inequality—including a poverty tour by then–Budget Committee Chairman Paul Ryan. These events are part of a concerted effort by conservative lawmakers and the media to paint the War on Poverty as a failure, even though the safety net reduced the poverty rate by more than half and lifted 48 million people above the poverty line in 2012.

Unfortunately, this newfound concern for poverty is at odds with a conservative policy agenda that would exacerbate inequality, hardship, and wage stagnation.

Under his “Opportunity Grant” proposal, Ryan has proposed converting a number of programs to state block grants, a decision that nonpartisan analysis suggests would reduce families’ ability to access key programs such as nutrition and housing assistance. In crafting this idea, Ryan and other conservatives often point to the Temporary Assistance for Needy Families program as a model—even though it does very little to mitigate poverty and hardship and is unresponsive to recessions.

Furthermore, in their most recent congressional budgets, Republicans obtained two-thirds of their cuts from programs helping low- and moderate-income families, while channeling additional resources towards tax cuts for the wealthy.

South Carolinians like Dr. Ebony Hilton take issue with this approach. Dr. Hilton grew up in poverty in Spartanburg, a city located almost 100 miles north of Columbia, as the middle child of a mother with only a high-school education. Now she earns in the six figures and serves as the first black female anesthesiologist at the Medical University of South Carolina. Dr. Hilton credits federal programs like Pell Grants for much of her success. As she told TalkPoverty, “Pell Grants allowed me to pursue higher education because when I was going through college, there was no option to call home for money for books or tuition or fees. The overwhelming amount of debt can be tremendous and can stop people from taking that extra step to pursue their life passion.”

4

5

In addition to attempting to gut programs that invest in people like Dr. Hilton, conservatives have stood in the way of policies that would raise stagnant wages, increase access to health insurance, and allow families to better balance the responsibilities of working and caring for themselves and their children.

For example, although a majority of Republican voters support raising the minimum wage, Republicans in Congress continue to block a minimum-wage hike that would actually save $53 billion in nutrition assistance over 10 years. In contrast, longtime state advocates like Sue Berkowitz, who serves as the Director of South Carolina Appleseed Legal Justice Center, view increasing wages as a core component of an anti-poverty strategy: “You can’t not examine why we haven’t increased the minimum wage in [nearly] 10 years. We can say all these wonderful things but without real plans, we’re saying we’re comfortable with people being in poverty.”

And for South Carolinians like Yolanda Gordon, conservative opposition to expanding Medicaid and providing access to paid sick days has proved economically destabilizing. Although Gordon has an associate’s degree in occupational therapy and works part-time at a nonprofit helping families of kids with disabilities, she struggles to provide for her three children—each of whom has special medical needs. To add insult to injury, South Carolina has refused to expand Medicaid, leaving her without health coverage.

Due to the intransigence of the state’s conservative leaders, Gordon is one of more than 3 million adults nationwide—and 123,000 South Carolinians—who fall into what is known as the “coverage gap.” That is, her income is too high to qualify her for Medicaid, but too low for the subsidies she needs to afford health insurance. Without these subsidies, the average cost of the least-expensive plan is around $333 per month in South Carolina.

As Gordon battles health issues like high cholesterol—which can lead to heart attacks and strokes—the state’s failure to expand Medicaid has left her in medical purgatory. In a scenario that is all too common, Gordon can’t afford medication and regular checkups without health insurance—in fact, she won’t be able to pay for an exam until next July. In the meantime, she has put herself on a diet to try to manage her condition. As she told TalkPoverty, “For those of us in states that didn’t take part in the Medicaid expansion, we just pray to God that we don’t get sick.”

If she or her children do fall ill, Gordon is not entitled to paid sick days, as employers are not required to provide them under state and federal laws. So if her oldest daughter, who has asthma, is sick at school, Gordon has to choose between earning a paycheck or taking care of her child.

The fact is that people like Yolanda Gordon need more than political posturing—they require higher wages, healthcare, paid sick and family leave, and increased investments in education, training, and other supports. This summit is an opportunity for conservatives to correct their legacy and set forth a policy agenda that matches their newfound rhetoric on poverty. Let’s hope they rise to the challenge.

Because Speaker Ryan and his allies, wrongly, couch discussions of spending in the context of scarce resources, the public is always led to believe that Congress must rob Peter to pay Paul. They insist there is only and always the harbinger of debt being the singularly most constraining factor preventing our government from funding public purpose. Nothing is further from reality than this cynical presentation of America’s capacity to fund itself.

There needs to be an open discussion concerning fiscal policy constraints on Congress allegedly preventing it from appropriating funds to resolve health care provision not only in South Carolina but the provision of funding nationally.

Clearly, one constraint is ideology (politics.) It would seem that a reasonable political solution would begin with the acknowledgment that doing nothing exacerbates human suffering. No one should support that alternative.

A second alternative is to agree to do something that optimizes available resources to resolve the problem poverty. That solution begins with the acknowledgement of the indisputable power of the Congress to make laws that create the currency with which all Federal Programs are funded.
Because our Federal Government is monetarily sovereign it can never, involuntarily, "become bankrupt." We can never be Greece, or any of the EC member nations because they do not have absolute control of their currency. Our Federal Government (Congress, Treasury, and Federal Reserve) issues a sovereign currency, the dollar, as a non-convertible, fiat currency, in a flexible exchange rate regime, and it owes all of its "debt" in those dollars and not in a foreign currency. Under these, irrefutable, monetary characteristics Congressional appropriations are constrained only by the actuality of inflation and Congress’ refusal to pay our bills (appropriate funding.)

Moreover, Congress never needs revenue per se to fund its appropriations. The notion that our government needs income to then spend, invest, grant to states, firms, households and individuals is, categorically, false in our post gold standard Modern Money Era beginning in 1971-’73.

Speaker Ryan and company would have us believe that tax revenue is needed to accomplish spending. That contention is illogical. Tax policy in America manages inflation by taking dollars out of the economy to prevent over spending. While there has been no serious threat of inflation since the 1970’s, we are being over taxed. Tax policy is also supposed to be designed to manage income distribution. It has failed this task over the past 45 years as marginal tax rates have become more regressive favoring the rich over the rest.

Simply put, tax revenue does not fund the Federal Government. That revenue is never recycled. The government simply issues more electronic dollars. It’s illogical and inefficient to recycle government liabilities.

The dollars with which we pay the tax liability must first come from government spending. Speaker Ryan knows this and that Government spending is the first source of dollars entering the economy. Those dollars are created by fiat. Congress says, we appropriate $5 Trillion to be spent from the Federal Government’s budget which we have approved and Treasury in conjunction with the Federal Reserve uses computers to markup checking accounts for all of us who are paid by government (Lockheed, Grumman, Federal Agencies, Social Security, Medicaid, TANF, Veterans, and thousands of other contractors, etc.) for our goods and services supplied to government or for grants/subsidies, etc., and that process is repeated from vendors to suppliers to service providers like local cleaners and garages, etc. throughout the economy.

Speaker Ryan makes a simple process complex because his solution is founded on the wrong premise. He has too often repeated the canard that the deficit must be reduced. Yet, as a former store manager he has not grasped the fundamental accounting fact that where there’s a deficit there is also a surplus nearby.
In the instance of the Federal Government, when it spends more than it receives in revenue (which it never needs and this construction is purely record keeping) Ryan, and too many others, consider this an economic Armageddon. None of them admit to the existence of the surplus. That surplus, from government “deficit spending dollars” is now held by those of us in the private sector. We now possess the dollars, it’s our surplus or technically our net financial savings after taxes are paid. It’s essentially interest free money for us to spend as we choose.

Our surplus from deficit spending is what keeps the economy growing. Federal (public) deficit spending is equal, to the penny, to net financial assets in the private sector. When Ryan and company tell us they’re going to cut the deficit it automatically means they are going to reduce the amount of interest free money available to us. That eventually will, in short order, force us to use our savings, retained earnings or borrow at interest just to maintain current spending. The last six times our economy went into recession were each preceded by either/or a government surplus or a balanced budget. In all cases too much was cut or taxed away from us by austerity policies.

Moreover, since this economy has high levels of regional and sub regional unemployment (ranging from 12% to 35%) the Federal Government should deficit spend until we have a full employment economy.

There is no rational fiscal policy argument against higher levels of deficit spending when we have real unemployment (not the headline U3 number of 5%) at the U6 number of 13% as of 12/30/2015.

As for the issue of poverty in South Carolina the answers lie in the above and the willingness of a Conservative Congress to accept the fact that the only constraint it faces in providing adequate levels of resources to South Carolina and the nation is its refusal to appropriate. It never needs tax revenue or revenue from the sale of treasury securities, wrongly called “borrowing.” Transactions between the Fed and Treasury manage the term structure of the Feds interest rate regime. The revenue generated never enters the money supply, the economy.